Schwarzman (Abington Senior High School, class of 1965) announced the gift on Feb. 14, his birthday, to much fanfare: giant gifts to public schools are rare, and Schwarzman said he hoped to inspire others to do so. He wanted to help train school superintendents on how to raise money like their privately funded competitors: “It’s not part of our culture in America” to give to public schools, he told CNBC. “We just assume someone else will take care of that.”

What did he want for his magnanimity? Just a little recognition. Normal stuff. A portrait of himself, displayed prominently in the school building. Input on the center’s construction progress, a review of the contractors. “Aggregated assessment data” on students’ progress in their new coding classes and whatever other computer stuff they get up to, just to make sure the thing’s working. Maybe they could name the Athletic Center after his late buddy from the track team, and the Hall of Fame after his late coach, and some yet-to-be-determined spaces after his brothers, Warren and Mark. And also: The whole high school should be called Abington Schwarzman “for as long as the high school exists.”

The school board voted on all this on March 27, committing to a pledge agreement that was still in flux. They had to move fast, to get the ball rolling on construction contracts and bidding and the rest. But they’d gotten ahead of themselves. Because the details were still being negotiated, many of those stipulations hadn’t been disclosed publicly. When the renaming was announced hours before the March 27 meeting, an uproar ignited in the suburban Philadelphia community.

Parents, students, and alumni were angry; they hadn’t been consulted. There was confusion over Schwarzman’s oversight. And what was this foundation created in 2017 to parcel out the money? Could the public please see the agreement, given that this is a public school?

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Theresa Keenan started a change.org petition, which has gathered more than 1,400 signatures. “As taxpayers, it was grossly negligent that the school board knew about this [name-change] stipulation and did not release that information,” she wrote. “This item was added to the meeting agenda three hours prior to the vote leaving no room for input from taxpayers which total more than $120 million dollars of annual income, parents, students, or alumni.”

Cowed, the school board apologized. They heard grievances at a meeting on Tuesday night, with about 300 attendees packed into the Abington Junior High School Little Theater, according to the Philadelphia Inquirer. Multiple times over the course of the meeting, people in the crowd shouted out complaints, the Inquirer reported. “These billionaires need to pay more taxes!” one yelled.

The school board president, Raymond McGarry, apologized profusely at the meeting. “Transparency in government is critical,” he told the crowd. “When government leaders are not transparent, the public loses faith in them.”

On Wednesday, the board released the now-rescinded agreement and rolled out a new plan that scrapped the new name: Abington will remain Abington. The board will revote on April 24, after the community had a chance to weigh in.

Much of the fury centered on the renaming. The agreement made clear that botching the naming part “will be considered a material breach” and could blow up the whole thing. Blackstone says that wasn’t actually a huge deal to Schwarzman.

“When asked to help his alma mater, Mr. Schwarzman agreed wholeheartedly,” Blackstone spokeswoman Christine Anderson tells Barron’s. “His intent was singularly to support the school’s desire to improve student preparedness. The naming was inconsequential, which is why he immediately withdrew the proposal.”

The math on these things is imperfect, but benchmarked against other gifts, Abington and Schwarzman overshot on the recognition’s scale. A few miles down the road, a donor and his wife are giving $10 million to Philadelphia’s Central High School, for a new performing-arts center that will bear their name. But Central High School will remain Central High School.

Even Schwarzman’s own gifts show the mismatch in gift and reward. In 2008, he gave the New York Public Library $100 million, and it renamed its main building after him. His money paid for a building, not an institution; it’s still the New York Public Library. In 2015, he gave $150 million to Yale University (class of 1969), and it’s still called Yale.

Other districts have similarly struggled with furors over naming recognition. In 2016, a Houston magnet school accepted a donation from former Enron executive Rich Kinder, with the agreement that the school would add the Kinder name. Spurred by public outrage, it later removed the naming obligation.

The rough landing for these donations fits in a broader struggle for viable public services, as private enterprise usurps or snaps up funding, from toll roads to schools.

The alternative-asset management industry—hedge funds and private equity, where Schwarzman made his billions—has a somewhat antagonistic history with public schools and teachers. Many hedge fund managers vocally and financially support charter schools, which often involves disparaging the public system, and many donate to groups that characterize pension obligations as hindrances to profitability.

In recent years, the president of the American Federation of Teachers, Randi Weingarten, has called for pensions to pull their money from hedge funds. “Why would you put your money with someone who wants to destroy you?” she asked.

The question of content oversight was also troubling. Vince Volz, a parent of three Abington kids, was concerned about the possible stipulations the money came with and restrictions on what can be taught, according to the Inquirer: Volz filed a formal complaint about Schwarzman’s donation with the Pennsylvania attorney general’s office, which said they’re looking into it.

Volz’s concerns echo 2014 complaints in Jefferson County, Colo., where teachers called in sick and hundreds of students walked out of their classes in protest of curriculum changes. The county’s school board had proposed reviewing the content of classes, aiming to ensure that the U.S.’s history and heritage were presented in a positive light. Materials for a college-credit history course, it said, should “promote citizenship, patriotism, essentials and benefits of the free-market system, respect for authority and respect for individual rights” and not “encourage or condone civil disorder, social strike or disregard of the law.” The board members who put forward the proposal were backed by Americans for Prosperity, a Koch Brothers political action committee.

With Schwarzman, the threat of reeducation was somewhat less urgent; he’s not known for his coding or robotics expertise, so curricular contributions would probably have been irrelevant. But his public comments—that he insisted on the school’s computer-literacy push as “sine qua non” for his donation—didn’t help that perception. While monitoring the impact of a donation isn’t unusual, students, parents, and alumni didn’t have access to the pledge agreement until this week, and so couldn’t reasonably assume he wouldn’t pick and choose the education he funded.

There is reason to be skeptical of megarich benefactors swooping in to save education. The $100 million donation from Mark Zuckerberg of
Facebook
in 2010 to help Newark, N.J.’s schools was supposed to build a shining new model. While eventually their efforts did appear to yield some improvements, according to a recent study, the turmoil of the endeavor—from Silicon Valley idealism bumping into bureaucracy and contract provisions, to lack of partnership with the existing community, to some $20 million spent on expensive consultants—eventually inspired a book untangling what went wrong.

Part of the poor reception, according to Abington Superintendent Amy Sichel and board president McGarry, stems from the school taking a broadly accepted framework from the private sphere and applying it in the public sector. That, and the speed of the process, compromised transparency and upset the community.

“While [renaming] may not be commonplace in public schools, neither is a $25 million gift commonplace,” McGarry says, “so we were kind of blazing a new trail. Now, of course, once you hand that over to lawyer, you start putting that in legalese, it takes on a life of its own.”

Sichel echoed the “trailblazers” description. Other superintendents have called and emailed, she says, asking her, “How’d ya do it? Talk to us about it! This is brilliant! How did you think about this?”

It was an innovation from a donor’s perspective, too. For someone like Schwarzman, $25 million is a song. As a donor, it doesn’t get you very far anymore.

Years of widening income inequality—which Schwarzman cited as a motivation for this donation, to help equip kids—has led to billionaires seeking the best way to give their money away, to optimize their charitable investments. All the money in the system, searching for yield, has run up the price tag for prestige donations to blue-chip schools.

If Schwarzman wanted his name on an institution of higher learning, he would need to add a zero. Closer in size: Carlyle founder David Rubenstein gave Duke University $20 million last year—for a scholarship program.

The lower gift sums means the donor gets more yield per dollar, a greater return on investment. So if naming rights are only available at fancy private schools at the $100 million-and-up donor level, this might be Schwarzman’s innovation: As Michael Milken ushered high-yield-rated companies to market, creating the junk-bond market, Schwarzman would move a step down the quality spectrum. High school, not college or grad school. Public instead of private.

Unfortunately, he didn’t account for some of the characteristics unique to this asset class, like the school board processes and community involvement. The resulting clash was a reminder that higher-yielding investments still carry higher risk.

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